Consider the case of another company. Turnkey printing is evaluating two mutually exvlusive projects. They both require $1 million investment todayand have expected NPV's of $200,00. Management conducted a full risk analysisof these two projects, and the results are shown below.
Risk Measure Project A Project B
Standard deviation of expected NPV's $80,000 $120,000
Project Beta 0.9 0.7
Correlation coefficient of project cash flows (relative to the firm's existing projects) 0.7 0.5
Which of the following statements about these projects' risk is correct?
1. Project B has more stand-alone risk than project A
2. Project A has more market risk than Project B
3. Project A has more corporate risk than Project B
4. Project B Has more corporate risk than Project A
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